In a significant crackdown on corporate malfeasance, the Securities and Exchange Board of India (Sebi) issued a stern interim order against Gensol Engineering on Tuesday, April 15, 2025, citing serious violations of corporate governance and fund misappropriation. The order follows an investigation that revealed the company’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, engaged in the fraudulent diversion of funds intended for the procurement of electric vehicles (EVs). This latest development comes amid a backdrop of financial turmoil for Gensol, which has faced downgrades from credit rating agencies and liquidity issues.
According to Sebi, the investigation was initiated after complaints were filed in June 2024 regarding the manipulation of share prices and the improper use of Gensol's funds. The regulator's findings indicated that Jaggi had transferred substantial sums to personal accounts and related parties, including Rs 6 crore to his mother, Rs 2 crore to his wife, and Rs 50 lakh to Ashneer Grover's Third Unicorn. Such transactions, Sebi noted, were indicative of a complete breakdown in internal controls within the company.
"The promoters were running a listed public company as if it were a proprietary firm," the Sebi order stated, highlighting the severity of the misconduct. In response to these revelations, Sebi has temporarily barred the Jaggi brothers from acting as directors or key managerial personnel and prohibited Gensol and its affiliates from trading in the securities market until further notice.
Gensol Engineering, which specializes in providing engineering, procurement, and construction (EPC) services in the renewable energy sector, particularly solar power projects, had also been involved in leasing electric vehicles to BluSmart, a ride-hailing service. However, reports indicate that BluSmart is now planning to exit its core ride-hailing business and pivot to becoming a fleet partner for Uber, further complicating Gensol’s financial landscape.
The Sebi order specifically pointed out that funds raised by Gensol as loans for procuring EVs were misused to purchase a luxury apartment in The Camellias, DLF Gurgaon. This high-end real estate acquisition was reportedly made through a series of layered transactions involving related parties, raising questions about the integrity of the company’s financial practices. Sebi's investigation revealed that Gensol had secured a loan of Rs 71 crore from the Indian Renewable Energy Development Agency (IREDA) in September 2022, ostensibly for promoting green financing.
However, the company only utilized a portion of these funds for their intended purpose. An amount of Rs 262.13 crore remains unaccounted for, according to Sebi's detailed analysis of Gensol's bank statements and transactions with Go-Auto, the dealer supplying the EVs. The regulator noted that Gensol acknowledged having procured only 4,704 electric vehicles worth Rs 567 crore, falling short of their commitment to acquire 6,400 vehicles.
In addition to the financial discrepancies, Sebi discovered multiple instances of loan defaults by Gensol, which were not disclosed in the company’s statements to credit rating agencies for the months of December 2024 through February 2025. This lack of transparency led to downgrades from agencies like Care Rating and ICRA, which cited payment delays as a significant concern. ICRA even alleged that Gensol had falsified documents related to its debt servicing.
Moreover, the Sebi order noted that Gensol had received over Rs 977 crore from IREDA and Power Finance Corporation (PFC) between FY22 and FY24, with Rs 663 crore earmarked for the purchase of electric vehicles. Yet, the company’s failure to account for the funds properly raises alarms about potential losses to investors.
As a result of the Sebi order, Gensol's stock took a hit, closing down 2.76% at Rs 129 on a day when broader market indices rose over 2%. The market's reaction underscores the growing investor concerns regarding Gensol's financial health and governance practices.
In light of the ongoing investigation, Sebi has also paused Gensol's recently announced 1:10 stock split, which was intended to attract more retail investors. The regulator expressed that this move would not be in the investors' best interest, given the findings of the investigation.
The fallout from this investigation and the interim order is likely to have lasting implications for Gensol Engineering. With the company grappling with financial instability and reputational damage, stakeholders are left questioning the future of the firm and the integrity of its leadership. As the situation unfolds, investors and market participants will be closely monitoring Gensol’s next steps and the broader impacts on the renewable energy sector.
In summary, the Sebi order against Gensol Engineering highlights the critical importance of corporate governance and accountability in the financial markets. As regulators tighten their scrutiny of corporate practices, firms must prioritize transparency and ethical conduct to maintain investor confidence and ensure sustainable growth.
